It may be sailing on stormy waters, but Israel’s economy is in strong shape
going into its 65th year, Finance Minister Yuval Steinitz told The Jerusalem
Post in an interview ahead of Independence Day.

Steinitz described
Israel’s growth figures of 4.8 percent for 2011 as “quite exceptional” and noted
that it had posted the fastest economic growth in the Western world in 2010 and
2011, as well as being the only country in the developed world where the level
of investments in the real economy had actually gone up.

However,
Steinitz cautioned that Israel was not yet out of the woods. “Generally speaking
one can say that the Israeli economy today is in better shape than it was [when
the global economic crisis broke out] in 2008... But we are not yet harboring in
the port; we still have to navigate our way in the ongoing economic storm,” he
said.

“Israel was always famous for the ability of this little nation to
defend itself, but over the last three years we have become quite well known for
our capacity to defend ourselves economically,” he added. “I think this is a
great and important achievement by Israel and its people.”

Steinitz said
Israel’s impressive growth was due to the government decision not to pour money
into the economy through stimulus plans and tax cuts, a policy he said the US
and other countries had adopted, and one that he derided as “sacrificing the
future to save the economy for the present.”

The finance minister did not
rule out raising taxes if the budget deficit continued to
increase.

“Currently at least, the picture [for 2012] is that we believe
that we will end up with a deficit of around 3.3%, slightly higher than what was
planned [2%] but not that significant,” he said.

“Until now I didn’t
decide to initiate any new taxes because it was unnecessary; if the deficit is
3.3% because our revenues are going down a bit this is not terrible...I
won’t give any figures, but if it will be beyond the range of 3-4% we might
reconsider.”

Steinitz said he understood why people felt they were not
sharing in the country’s economic success and was aware that this summer may see
a repeat of last year’s social justice protests despite steps taken by the
government.

“There are many things to be fixed in the Israeli economy and
society and therefore I can understand why people are not satisfied despite the
country’s economic success,” he said. “We have a lot to fix in society and we
are doing it, but it takes time.”